A section of civil society organisations (CSOs) has asked the government to speed the relaunch of a cooperative bank in order to extend cheap loans for small-scale farmers.
Julius Mukunda, the coordinator, Civil Society Budget Advocacy Group (CSBAG), said the government on several occasions has promised to form a cooperative bank but nothing concrete has come out of the promises.
“For over three years, the government has guaranteed to kickstart the formation of a cooperative bank at a cost of Shs 35bn, but nothing materialized to date. So, it is high time the establishment of the bank started if farmers are to start serious commercial farming,” he said.
He further explained that government has largely focused on savings and credit cooperatives (Saccos), leaving behind production, marketing cooperatives. Mukunda was addressing a press conference organised by CSOs to review the national budget framework paper for FY2016/17 at CSBAG head office in Kampala recently.
“We are calling for a cooperative bank because the bank understands the dynamics of marketing, and warehousing, yet the ordinary banks shy away from financing agricultural activities,” he said.
The budget framework paper for 2014/15 in part stated: “Ministry of Finance will undertake a study that will guide government on the best way to enhance the development finance products and services previously offered by institutions such as Uganda Cooperative bank. It will seek to use existing structures including restoring Uganda Cooperative bank to consolidate and enhance all the available development funds.”
The Cooperative bank was closed over 10 years ago due to mismanagement. Agnes Kirabo, the executive director of Food Rights Alliance, said although government set aside colossal sums of money every year to finance the agricultural sector, the money did not reach small-scale farmers.
“The money that government sends to banks to be given to farmers doesn’t entirely reach the small farmholders. The money only benefits large-scale farmers especially those involved in value addition,” she said.
The agricultural sector employs about 70 per cent of Uganda’s labour force, and the majority, especially the poor in the rural areas, directly or indirectly depend on it.
During the 2014/15 financial year, the agricultural sector was allocated Shs 437bn, which was 2.9 per cent of the national budget.